Phillip W. Magness

Historian – 19th century United States

Something Rotten in the State of Denmark

I dislike the products electoral politics for a number of reasons, and presently have no horse in the ongoing race. Others who apparently do have suggested of late that even persons of a libertarian-ish perspective – arguably the least represented viewpoint amongst the current crop of candidates, and now politically homeless to borrow a phrase from a recent Daily Beast column – should find and settle for a least-bad option. Answering this query, one strangely popular position suggests a case might be made for a libertarian to support the campaign that is most in line with the model of European social democracy. As offered in this post, the argument is really a simple syllogism:

Premise 1: Bernie Sanders wants to make America more like Denmark, Canada, or Sweden.

Premise 2: Denmark et al rank higher than America on the Fraser Institute’s 2015 Freedom Index.

Conclusion: People who value higher levels of economic freedom should therefore support Sanders.

I actually take no position on Sanders’ campaign, finding some elements of it less disagreeable than others. In fact, I’ll even suggest that only a slight tweaking of this argument in a different direction (as we shall see below) could make it applicable to almost any candidate, including Donald Trump. Accordingly take these remarks as a matter of testing the validity of what I find to be a deceivingly appealing but also very poorly constructed argument, rather than a commentary on specific candidates. So while Sanders is indeed the occasion, his specific example only muddies the political waters around a philosophically problematic way to go about rank ordering really any candidate, that is to say: taking him at his word that he will “Make America ____” (More like Denmark/Great Again/Your Ad Here).

Political Economy & Denmark:

There’s a fundamental flaw in the claim that a stated preference for making the U.S. more like Denmark (or Canada or Sweden) makes one’s candidacy commendable to libertarians on account of those countries’ comparatively preferable Fraser index ranking. It assumes that a replication of the economic policies of either of those countries is actually an attainable movement out of the present political structures of the United States. Such a sweeping and systemic move, if attempted in the U.S., would immediately encounter several deeply entrenched political interests that simply make it an untenable proposition. And if, by some miracle, it were ever able to overcome those already entrenched interests, it would then succumb to new political appropriation by further interest group capture, leading to the perversion of its original stated goals.

Given these two insurmountable obstacles, it is practically inevitable that a political platform premised upon “making” the U.S. more like Denmark would be completely overrun by the forces of rent seeking and corruption that are also endemic to our constitutional system, thereby yielding an outcome that likely delivers a highly concentrated dose of all the ills of the Denmark model while providing little-to-none that is advantageous for liberty. Indeed, we already see evidence of this pattern taking place in the policy areas where the political preferences of the stated candidate (Sanders) veer most sharply from the model of Denmark – his hostility to free trade, his likely continuation of an expansionist monetary policy that veers significantly from the European model, and his stated aversions to deregulation and administrative decentralization, all of which reflect core constituencies – i.e. labor unions, left-leaning economic nationalists, and progressive planners – in his electoral coalition. Nor is this strictly endemic to Sanders. More or less the same could be said of Trump, who curiously subscribes to very similar views of trade and certain regulatory policies, albeit supplanting left-leaning economic nationalism with right-leaning economic nationalism to get there.

Denmark, flawed though it may be in some areas and preferable in others, did not come into being out of nothing from a vacuum of pre-planned human design. It is an institutional and political derivative of human actions against a backdrop of uncertainty and even accident, all of which emerged in their present forms over several centuries. It did so in the presence of its own respective interest groups, though in some cases Denmark also benefited from particular insulation from these pressures that the United States did not have the luxury of escaping. To suggest that we could attain greater liberty by simply “implementing” a Danish economic model here with the snap of a finger and the pull of a voting machine lever isn’t just a bad idea in terms of its likely policy results – it’s outright idiotic, as evidenced by its impracticality and fundamental misunderstanding of the role of short term electoral politics in shaping the trajectory of government policies.

A Mistake of Causality:

Some variants of the Denmark argument, including the one critiqued here, also carry an implicit causal assertion derived from an older dialogue than the immediate question of libertarian electoral support. The argument essentially holds that various illiberal economic policies – trade protectionism, over-regulation and the sort – are derivatives of the type of populist political movements that take hold in the wake of a lopsided distribution of the winnings and harms of market liberalism, even if such a position is on the net beneficial. This argument effectively identifies the European social welfare state model as a desirable corollary to policies such as free trade and deregulation for the simple reason that it alleviates political pressures to reverse those policies with something significantly more damaging than those harmed in the transition to them. In short, it holds that Denmark may sustain its economically free policies precisely because it also complements them with a large safety net, including for persons displaced by market liberalization.

Though in some sense intuitively appealing, this argument fundamentally mistakes causality in the genesis of economic policies.

Contrary to its safety valve assumptions, political demand for specific illiberal economic policies like trade protectionism and regulation almost never emerges from large, diffuse populist electoral movements. Mancur Olson taught us as much with an interest group model that has remarkably robust predictive ability for political outcomes. Rather, political demand for specific policies is almost invariably the product of small, concentrated, homogeneous interest groups that are engaged in specific acts of rent seeking for their own industry, or against competitors that lack the political access to resist a homogeneous interest group action.

This latter condition severely dampens the notion that a large welfare state alleviates political pressures for other illiberal economic policies like protectionism, command-and-control regulation etc. Rather, at best the aforementioned populist movements are riding upon the successes of concentrated rent-seeking interests on occasions where they happen to overlap, producing a sort of bootleggers and baptists scenario. This of course also indicates that rent-seeking policies will tend to emerge irrespective of populist support or ambivalence, meaning the existence or absence of a welfare state will have very little to do with their political success. The welfare state theory, in effect, misdiagnosis the source of the other bad policies it purports to alleviate.

Revisiting our Syllogism:

Noting these complications to the Denmark argument should be sufficient in putting it to rest in terms of its dysfunctional procession from concept to implementation, the latter simply being untenable. But I also noted there was an even more fundamental flaw in the original electoral support argument’s structure. Let’s return to the syllogism, this time changing out a few of the particulars:

Premise 1. Vermin Supreme wants to make America more like Disneyland.

Premise 2. Disneyland ranks higher on the Happiest Place On Earth Index than most cities in America.

Conclusion. People who value higher levels of happiness should therefore support Supreme.

Note what we did here. We swapped Disneyland for Denmark, “happiness” for “economic freedom,” an imaginary Happiest Place on Earth Index for the Fraser Index, and perennial joke candidate Vermin Supreme for Sanders. And yet the argument still operates on the same level, which is to say that its conclusion does not follow from either premise. Nor is this specific to any candidate. Try it yourself with Donald Trump, making America “great again,” and a “greatness” index in which the top spot is held not by Denmark but by some ostentatious gold-plated casino on the Jersey shore. You will then quickly arrive at the universality of the structural flaw in a certain argument that some people who should know better are presently touting as “brilliant.”

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